Correlation Between Dow Jones and Teton Convertible
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Teton Convertible at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and Teton Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Teton Vertible Securities, you can compare the effects of market volatilities on Dow Jones and Teton Convertible and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dow Jones with a short position of Teton Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Teton Convertible.
Diversification Opportunities for Dow Jones and Teton Convertible
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Teton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Teton Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Vertible Securities and Dow Jones is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dow Jones Industrial are associated (or correlated) with Teton Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Vertible Securities has no effect on the direction of Dow Jones i.e., Dow Jones and Teton Convertible go up and down completely randomly.
Pair Corralation between Dow Jones and Teton Convertible
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.11 times more return on investment than Teton Convertible. However, Dow Jones is 1.11 times more volatile than Teton Vertible Securities. It trades about 0.13 of its potential returns per unit of risk. Teton Vertible Securities is currently generating about 0.13 per unit of risk. If you would invest 3,624,787 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 853,413 from holding Dow Jones Industrial or generate 23.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Teton Vertible Securities
Performance |
| Timeline |
Dow Jones and Teton Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Teton Vertible Securities
Pair trading matchups for Teton Convertible
Pair Trading with Dow Jones and Teton Convertible
The main advantage of trading using opposite Dow Jones and Teton Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Teton Convertible can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Teton Convertible will offset losses from the drop in Teton Convertible's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Teton Convertible vs. Guggenheim Risk Managed | Teton Convertible vs. Deutsche Real Estate | Teton Convertible vs. Fidelity Real Estate | Teton Convertible vs. Tiaa Cref Real Estate |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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